NBFC Education Loan Without Collateral

✓ NBFCs for education loans

✓ Interest rates and Loan amounts

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In our previous articles, we have mentioned how Government banks offer great schemes for abroad education loans. However, Government banks require collateral for processing an education loan for abroad studies, which is something not every student has. 

Such students can approach private lenders for education loans without collateral. Private sector banks and NBFCs are two major unsecured education loan lenders in India, and this article is focused on NBFCs. 

You can also watch the 9th episode of our web series named LoanFlix on Youtube which is also on the same subject. 

Why Choose an Unsecured Education Loan from NBFCs?

NBFCs come to the rescue of students who are not deemed fit for an education loan by a Government bank. The most common reasons are below

       1. Under the RBI mandate, Government banks can offer only up to 7.5 lacs of unsecured education loans, which is not enough for abroad education.

       2. Many students do not have collateral to pledge to take a loan against it.

       3. Collateral value is not enough to cover the expenses of abroad studies.

Although NBFCs do offer huge amounts of education loans without collateral (up to Rs. 75 lakhs), their interest rates will be on a little higher side.

Don't let limited finances limit your potential. Unleash your full potential by letting us help you find funds.

Major NBFCs functioning in India

Primarily, there are four NBFCs (Non- Banking Financial Corporations) functioning in India. They mainly focus on lending educational loans. They are

The above list has been compiled in the order of their age in the market. Our team at WeMakeScholars works with all of them.

Read More on Abroad Education Loan Without Collateral NBFCs, Processing time & More!

Factors considered by NBFCs for approval of Unsecured Education Loans

Before clearing a candidate for education loan approval, NBFCs take certain factors into consideration. The following aspects of a candidate’s profile are considered:

       1. The candidates' academic details (10th, 12th, degree certificate, TOEFL, IELTS, GRE, GMAT, SAT grades)

       2. The co-applicants income profile with proof (Salary slips, Income Tax Returns, CIBIL score, etc.)

       3. Chosen course for higher education.

       4. Chosen country for higher education.

All the above-mentioned factors have been covered in detail in our article titled, “Eligibility for Education Loan: Criteria for Loan Applicants”. 

Unsecured Education Loan Terms

Unsecured education loan interest rate: 

The Rate of Interest (RoI), the maximum amount for loan approval, etc. are the most researched aspects of any kind of loan. One needs to note that none of the above terms is constant when it comes to securing abroad education loans from NBFCs.

To understand what this means, let us take a look at certain cases undertaken by the WeMakeScholars team:

Until three months ago, our team was able to deliver unsecured education loans of amounts up to Rs. 40-50 lakhs, with a rate of interest of 10.5%, for candidates aspiring to go to the US for further studies. Meanwhile, the interest rate for those candidates who did not have a strong profile (in terms of academics, chosen university, country, and parents’ income) was pushed to as high as 12%.

Current market scenario:

In recent times, due to revised RBI (Reserve Bank of India) norms, many NBFCs are struggling to raise capital in order to ensure their survival in the market. Due to this, the NBFCs that have managed to float despite the circumstances are monopolizing the loan market.

The interest rates for loans from NBFCs have also increased accordingly. Let us take a look at the country-wise interest rates charged by NBFCs:

  • The US: Interest rates start at 11% to 12% for a loan amount of up to 60 lakhs.
  • Countries Other than the US (Germany, Australia, Ireland, Canada): The former interest rate for a loan amount of Rs. 15 lakhs to Rs. 25 lakhs was 12.75%. As of today, the interest rates are at 12% to 13.5% with no guarantee of a successful loan sanction.

Additional information for a Beginner

If you are only thinking of applying for an unsecured education loan to fund your higher studies, here are a few points which you must remember before beginning the unsecured education loan process.

  • NBFCs charge a processing fee, which is to be paid after a provisional approval of the loan is granted. This fee amounts to about 1% of your sanctioned loan amount, plus GST. It may go up to 1.5% to 2% + GST.
  • It is mandatory for the applicant to take loan insurance. The loan insurance fee is adjusted in the loan amount. It is a one-time payment fee, which is about 1% to 2% of the total loan amount sanctioned.
  • Unlike, Government banks, NBFCs do not grant a payment-free moratorium period to their students. They mostly ask applicants to start paying the partial or full interest on disbursed loan amount from the beginning of the course.

Why do Applicants opt for NBFCs?

Applicants who choose NBFCs for their unsecured education loan needs are mostly the ones who are not deemed eligible by Government banks for loan approvals. However, this may not be the only reason that makes NBFCs a more attractive option for prospective candidates. The following reasons also compel candidates to turn to NBFCs, rather than approach Government banks.

  • Faster processing time: If a student applies for an unsecured education loan to any NBFC through WeMakeScholars, the processing time will not exceed four to five days. This procedure can be done in the comfort of your home as it is to be done online.
  • Easy disbursement of education loans: Unlike Government banks, NBFCs never ask for details on how the loan amount is going to be used. They will immediately disburse the loan amount.
  • Less Paperwork: Most candidates who need to avail of unsecured education loans approach NBFCs. As there is no collateral involved, there is minimal paperwork involved.
  • No Loan Margin: NBFCs do not impose any loan margin on the total loan amount. Hence, the candidates do not have to provide proof of any funds. 
Are you facing financial hurdles that discourage you from pursuing your education dreams?

Why Apply through WeMakeScholars?

Most applicants chose WeMakeScholars because of their trust in our ability to make procedures transparent. Every minute detail is explained to students by our financial officers from the beginning. Our main goal is to give a clear picture of any education loan scheme for our students.

You get an additional 0.5% discount on the rate of interest when you process your unsecured education loans via WeMakeScholars. Our financial officers will also negotiate the loan terms on your behalf. Many of our students have received unsecured education loans at reduced interest rates. 

You can get an idea about the same when you go through various testimonials written by students, who sanctioned their education loan through us.

Education Loan FAQs

  • What are the eligibility criteria for getting an education loan from an NBFC?

    The eligibility criteria for an education loan from an NBFC may vary, but typically include factors such as the applicant's age, academic qualifications, work experience, income, credit score, and the chosen course and institute. Some NBFCs may also require the applicant to have a co-applicant or guarantor.

  • How long does it take to get approval for an education loan from an NBFC?

    The time taken for approval can vary from lender to lender, but it typically takes a few days to a week. Some NBFCs may provide instant approvals, while others may take longer to process the application. But if you opt to go to NBFCs via WeMakeScholars your process will be hassle-free, more convenient, and have many additional benefits, just request a callback from our financial officers.

  • How much time do I have to repay the education loan from an NBFC?

    The repayment period for education loans from NBFCs may vary depending on the lender's policies and the loan amount. the repayment duration can go up to 15 years and some NBFCs may offer flexible repayment options based on the applicant's income and other factors.

  • Do I need a co-applicant or guarantor to get an education loan from an NBFC?

    Some NBFCs may require a co-applicant or guarantor to support the loan application, depending on the applicant's eligibility and the loan amount required. This is because unsecured loans carry higher risks for lenders, and they may require additional security to minimize their risks.


CRISIL Expects Education Loans by NBFCs to grow by 40% to Rs 35,000 this year

24th April, 2023

The rise in education loans by NBFCs is not huge but way better than the last year, claims CRISIL.

According to CRISIL, the education loan AUM is estimated to have nearly doubled to Rs 25,000 crores in FY23, compared to 13,000 crores in FY22.

The good news is that despite the increase in education loans, the asset quality has remained harmless because of a low number of non-performing assets due to protective structural features by the NBFCs.

Protective structural features like mandatory co-applicant, focus on STEM courses, and structured repayment terms have helped non-banking financial corporations(NBFCs) in maintaining NPA below 0.5% even during the pandemic.

Specialized NBFCs Empower Students with Tailored Education Financing in India

Education is crucial for India's future prosperity, and the education financing sector has experienced significant growth. Specialized education-focused NBFCs now offer personalized solutions for students. 

These NBFCs cover various education expenses, including tuition, travel, accommodation, and living costs. Collaborating with foreign institutions allows students to pursue diverse courses, from traditional to cutting-edge fields like aviation and robotics. A student-centric approach guides their evaluation process, considering academic performance, test scores, and university reputation. 

Avanse, for instance, tailors loan options based on employability potential. Flexible repayment options cater to millennial customers, enabling contributions during or after the course. The NBFCs provide comprehensive guidance throughout the higher education journey for students and parents. However, thorough research is advised to understand loan details and find the best financing solution for education needs.

Last updated - 29/07/2023